August 15, 2022

Tesla sales are slowing production as pandemic hits

Tesla said on Saturday that vehicle deliveries from April to June fell 18 percent from the first quarter of the year, a rare slowdown for the company due to manufacturing problems in China.

Tesla sells more electric cars than any other company, and until recently was expanding rapidly as rising gasoline prices in China, Europe and the United States boosted the appeal of battery power. The company continues to withstand supply chain turbulence better than competitors General Motors and ToyotaBoth saw steep declines in sales on Friday.

There is plenty of demand for cars, especially electric cars, but shortages of semiconductors and other key components have forced buyers to wait months for deliveries.

Tesla Delivered more than 254,000 vehicles quarter compared to 310,000 in the first quarter. It was the first quarterly decline in deliveries since the start of 2020, when the pandemic hit global car sales.

Tesla on Saturday suggested deliveries could pick up in the coming months as it overcomes supply chain problems, making more cars in June than ever before in its history.

Outages and shortages of parts related to pandemic-related operations at the company’s factory in Shanghai. China has the world’s largest car market and accounts for 40 percent of Tesla sales.

Manufacturing in China was “an absolute disaster in April and May,” Wedbush Securities analysts Daniel Ives and John Cuttingris said in a note to investors last week.

Despite the slowdown in deliveries, Tesla is still outperforming other automakers. Compared to the first quarter of 2021, Tesla deliveries rose 26 percent. That’s much better than General Motors, which on Friday reported a 15 percent drop in U.S. new vehicle deliveries in the second quarter from a year earlier. Similarly, Toyota Motor’s US sales fell 23 percent.

Tesla has more orders than it can fill, but demand could drop if the global economy hits a bottleneck. Tesla’s chief executive Elon Musk warned in an interview Bloomberg News A recession in June is “inevitable at some point” and “more likely” than it will be soon. The company has told the employees that it will give Reduced by 10 percent Its salaried employees.

Tesla is unlikely to match its growth from last year, when deliveries jumped 90 percent to 940,000 cars. A 50 percent increase by 2022 is more realistic, Wedbush analysts said.

This, they said in a note on Saturday, was still “an impressive achievement” considering that China had been “essentially shut down for two months”.

The slow growth rate is one factor that has put off investors Reassessing Tesla’s Chances of Dominating the Car Business. Tesla shares have fallen more than 40 percent from their peak in November as more buyers opt for electric cars because of their better energy efficiency.

Depending on local usage rates, an electric car can be significantly less efficient than a fossil-fuel vehicle. A Tesla Model 3 standard range equals 142 miles per gallon and costs $450 a year in fuel, according to the Environmental Protection Agency. By comparison, a Honda Accord with a gasoline engine gets 33 miles per gallon and costs $2,200 a year in fuel.